While neither company wanted to disclose the terms of the agreement, both companies will share the advertising revenue generated from Joost users. Also, Viacom will have a say as to which programs and movies are available for Joost viewers.

Janus Friis and Niklas Zennstrom, the creators of Kazaa and Skype, are privately testing Joost with around 10,000 users. The company boasts that their service "is a new way of watching TV on the Internet." -- Friis and Zennstrom essentially want people to turn off their TV and head for the computer. Joost should be available to the public by Summer 2007.

Some analysts pointed out that the move by Viacom could put pressure on YouTube's relationships with other media companies who are trying to get content onto the Internet.

Meanwhile, a deal between Viacom and YouTube is still not out of the question, according to Forrester analyst James McQuivey.